2.
Summer Tyme Inc. is considering a new 4-year expansion project that requires an initial fixed asset investment of $2.106 million. The fixed asset will be depreciated straight-line to zero over 4 years after which time it will be worthless and hauled away for an after-tax cash flow of $0. In each year the project is estimated to generate $1872000 in annual sales with annual costs of $748800. If the tax rate is 32 percent and the cost of capital for the project is 12 percent the NPV for this project is $.
Recall that the operating cash flow in each year can be found as net income plus depreciation so find depreciation find net income and add the two together to get OCF. Also when there are no project sales terminal values or opportunity costs the relevant cash flows for each year can be found as operating cash flow plus cash flow effects from changes in NWC plus cash flow effects from capital spending.
(Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g. 32.16))3.Summer Tyme Inc. is considering a new 3-year expansion project that requires an initial fixed asset investment of $2.430 million. The fixed asset will be depreciated straight-line to zero over 3 years. At the end of the project the asset will be sold for $189000. Net working capital would be $270000 at time 0 and remain at $270000 for all years except for year 3. Net working capital for year 3 would be 0. The project is estimated to generate $2160000 in annual sales with annual costs of $864000. The tax rate is 32 percent and the cost of capital for the project is 14 percent. The NPV for this project is $.
Recall that the operating cash flow in each year can be found as net income plus depreciation so find depreciation find net income and add the two together to get OCF. Also when there are no project sales terminal values or opportunity costs the relevant cash flows for each year can be found as operating cash flow plus cash flow effects from changes in NWC plus cash flow effects from capital spending.
(Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g. 32.16))Deadline is Tuesday at 10pm EST